December 21, 2018
How might fungicides benefit your operation?
First, consider how to approach a budget.
“When looking at budgeting problems, there are two types of budgets you can utilize,” said Michael Langemeier, economist at Purdue University, during a Dec. 10 BASF-sponsored webinar. “Today, we’re talking about ‘partial budgeting’ which compares benefits to costs when making a decision. It’s very useful for quite a few different problems.
“You can also use ‘enterprise budgeting.’ When looking at making changes in the operation, enterprise budgeting usually requires more information.”
A partial budget, said Langemeier “can be used to analyze possible change in the operation involving one or several enterprise budgets. For example, if you’re focusing on corn production, you can look at a possible change in what you’re doing and evaluate the benefit and costs of that change.”
A partial budget “provides a formal and consistent method for calculating the expected change in profit. … When using a partial budget, you focus on changes in revenues and costs. That’s why they’re simpler to use than an enterprise budget where you’d need every cost associated with” a crop.
The main example Langemeier looked at is the impact of fungicide use. “But there are many uses of partial budgeting. We can use it to look at increasing corn enterprise by renting additional land. We can use it to compare conservation tillage versus no-till. We can use a partial budget to look at whether we want to use more corn and less soybeans in 2019. How about looking at side-dressing nitrogen — should I side-dress and how much should I put on? Another example is irrigation scheduling — should I run the pivot and how much should I put on? All of these are good examples where partial budgets can be quite useful.”
According to Langemeier, here are the questions you need to look at with partial budgeting:
• What new or additional costs will be incurred? “For example, if looking at fungicide, what is the cost of the (product) and what is the cost of application?”
• What current costs will be reduced or eliminated? “In some cases, it’s zero. For the impact of fungicide use, this would probably be zero.”
• What new or additional revenue will be received? “With fungicides, how much will yield increase due to application? If there is any difference in standability or grain quality, that could be included in new or additional revenue.”
• What current revenue will be lost or reduced? “With fungicide use that would probably be zero.”
About the Author(s)
You May Also Like
Current Conditions for
Enter a zip code to see the weather conditions for a different location.
This Week in Agribusiness, Dec. 9, 2023Dec 08, 2023
FFA Tribute: Caleb HorneDec 08, 2023
Grains face modest end-of-week cutsJan 18, 2023
USDA issues minor cuts to 2023/24 Brazil soybean cropDec 08, 2023